Current trend

The NZD/USD pair is showing a moderate decline, reversing downwards after updating local highs from July 22 at the end of last week. Quotes are testing 0.5930 for a breakdown, while trading participants expect the emergence of new movement drivers.

The upward dynamics were supported by the July report on the US labor market, according to which Nonfarm Payrolls decreased from 179.0 thousand (revised from 206.0 thousand) to 114.0 thousand, which was significantly worse than the market expectations of 175.0 thousand, Average Hourly Earnings slowed down from 3.8% to 3.6% with a forecast of 3.7% in annual terms and from 0.3% to 0.2% in monthly terms, and the Unemployment Rate increased from 4.1% to 4.3%, while analysts did not expect changes in the indicator.

Weak labor market data has boosted investor confidence that the Fed will soon cut borrowing costs, with the likelihood of a 25-basis-point adjustment in September now nearly 80.0%. Another negative factor for the American currency was the June statistics on Factory Orders, which reflected a reduction in their volumes by 3.3% after –0.5% in the previous month, while experts expected –2.9%.

Meanwhile, the New Zealand dollar is receiving some support from macroeconomic statistics from China, where the Caixin Services PMI rose from 51.2 points to 52.1 points in July, compared to preliminary estimates of 51.4 points. China will release July inflation data later this week, while New Zealand's second-quarter labor market report is due out on Wednesday, with analysts expecting the Unemployment Rate to rise sharply from 4.3% to 4.7%, among other things.

The Reserve Bank of New Zealand plans to introduce a national digital currency by 2030, which will be used alongside fiat money. Last week, public consultations concluded, with more than 18,000 responses received, and focus groups are planned to discuss the project. Financial authorities believe New Zealand's payments system lacks innovation and digital money could be a real boost to competition.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short/ultra-short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, having rebounded from the level of "80", reversed into the downward plane, indicating risks of overbought New Zealand dollar in the ultra-short term.

Resistance levels: 0.5950, 0.5975, 0.6000, 0.6030.

Support levels: 0.5920, 0.5885, 0.5858, 0.5830.

Trading tips

Short positions may be opened after a breakdown of 0.5920 with the target at 0.5858. Stop-loss — 0.5950. Implementation time: 1-2 days.

Long positions should be opened at the current price with a target of 0.6030. Stop loss is 0.5975.